Key Psychology Tips

Psychology tips:

Our brains have 2 ways of thinking. One from our X-System (Emotions - Autopilot) and C-System (Logic). 

1.) Being mindful of where you are at and always pushing to keep your head in the game with your C-System is where the consistency will thrive. 

Often traders get caught up in the emotional X-System that proves to be fatal to there account. If you are ever in a emotional situation while actively in the market, over-trading, not following your plan. Bring yourself back by mentally grounding yourself. "I am sitting at my desk with my feet on the ground and my hands on my desk in Seattle, WA." Once you are able to do this a weight will lift from you as you are no longer glued into the market. 

2.) HOUSE MONEY: Statistically, looking over 80,000 accounts traders trade the worst the month after a big win. This is due to the overconfidence that seeps into the mind. Overconfidence is a killer and has been proven to produce a far higher frequency that comes down to grinding out commissions and placing stupid trades. Always be mindful of where you are at and lean on your C-System.

3.) Process: Set aside the thought of how much you want to make out of the trade, the risk or how it should pan out. No body knows, its all about the process. Billy Beane is all about the process, process, process..... He changed the game of baseball. Just imagine if he focused on every loss and win instead of his overall process and the bigger picture.

4.) Disposition Effect: Looking over the 80,000 accounts of retail traders the average holding time of a winner is 108 day and 128 days for a looser. The average retail trader is 1.7 x more likely to sell a winner than a looser. This could be to buy another stock or to cover another loss or to just get some quick cash etc. 

The average fund manager is 1.2 times as likely to sell a winner and the highly successful fund managers are 1.5 times less likely to sell a winner.  

Even Jessy Livermore said it came down to sitting tight. 

5.) Emotional Detachment: Placing a resting order before the market reaches your area hours or even days prior to price coming to it helps detach traders from there emotional state. This removes terminal fear induced paralysis that many traders run into when placing there order in real time. 

6.) Shame: After taking a burner you may feel shame (Im an idiot, why did I place that trade). This only leads to fear which leads to risk aversion. If the trade was part of your process you should be grateful for it and wear it confidently. Its better to trade right and loose then to trade wrong and win.